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To Surcharge or not to Surcharge? That is the Question
June 28, 2017
Payments Expert

Platforms and merchants periodically ask us to help them pass credit card fees onto the customer, so that the merchant does not have to incur the charge. This practice, called surcharging, has numerous drawbacks and benefits.

WePay can indeed help partners with surcharging. But before we dive into the details of surcharging, we feel compelled to state our point of view: we do not think surcharging is a good business practice for most platforms and merchants. Why? Because additional fees add friction to the checkout experience and checkout friction leads to a lower conversion rate – this is at odds with our aim to help platforms and merchants earn more revenue with integrated payments.

So we encourage you to tread very carefully into this area… and do consider alternative approaches for covering the cost of credit card fees. Below is additional information to help you decide if surcharging is right for your business:

How does surcharging work?

Use WePay’s credit card call to retrieve the card’s BIN (bank identification number). The BIN indicates if the card is a credit card or a debit card (only credit cards are eligible for surcharging in the US). If the card is a credit card, then the merchant can assess a surcharge fee. This WePay functionality is currently available to partners with custom checkout pages.

Are there any rules in surcharging?

Yes, there are a lot. Certain states in the US have laws limiting or prohibiting surcharging. Credit card networks have their own rules on surcharging as well. The surcharge amount can be a fixed or variable amount, but it cannot exceed the merchant’s credit card acceptance fees or 4%, whichever is lower. Surcharge disclosures are necessary too: the surcharge amount must be included as a separate line item on the receipt, and there needs to be a surcharge disclosure on the checkout page. As mentioned above, surcharges in the US are only limited to credit cards.

Does WePay help?

As always, WePay is your trusted partner in making this important business decision. Your account manager can offer counsel on surcharging based on your industry and your unique business model. WePay will also provide guidelines and help your business comply with card network rules through card testing and validation of receipts. At this time, the platform is responsible for complying with state laws.

What are viable alternatives to surcharging?

If you want to help your merchants cover the cost of accepting credit cards, there are other options available. A Convenience Fee can be applied to all payment methods for card-not-present transactions. Additionally, merchants can offer discounts or other incentives to payers using alternative methods of payment.

For more information, see our documentation here or reach out to your account manager to get started.


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